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Telstra pay TV role 'dreadful': minister

Alison Bell

Key cabinet ministers have given differing views on Telstra's ownership of Foxtel, as the government prepares to carve up the telco giant.

One minister says Telstra's role in pay TV has "been dreadful" for competition in the telecommunications sector.

But another says Telstra may be allowed to hold onto its Foxtel stake if it splits in two, as the government wants.

Finance Minister Lindsay Tanner said Telstra's involvement in subscription television was a major impediment to competition in Australia.

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"(In) virtually every other developed country, the main competitor to the traditional phone network is the cable TV network," Mr Tanner told ABC Television on Sunday.

"Here, the phone company owns both. It's been dreadful for competition."

Mr Tanner was a Labor backbencher in 1995 when the Keating government let Telstra, then a publicly-owned corporation, buy into Foxtel with media mogul Rupert Murdoch's News Corporation.

That was a "significant mistake", Mr Tanner said.

But Communications Minister Stephen Conroy emphasised that Telstra may not be forced to let Foxtel go - provided it bowed to the government's reform agenda.

The minister said Telstra needed "flexibility" to determine its future.

"As is clear in the legislation, the minister has the discretion not to enforce that if an acceptable form of structural separation is put forward," Senator Conroy told ABC Television.

Opposition communications spokesman Nick Minchin is lukewarm on the idea of splitting up Telstra.

Labor's plan to split Telstra would "renationalise" fixed-line broadband services in Australia with a state-sponsored monopoly, he said.

The government wants a $43 billion government-run national broadband network to compete with private-sector wireless spectrum.

Under the plan, Telstra would be broken up before it is allowed to expand its wireless broadband services.

"They (the government) want to stop Telstra being able to compete with this $43 billion monster they want to create," Senator Minchin told Sky News.

Labor has criticised the Howard government for privatising Telstra without breaking it up first, creating a private-sector giant with too much market concentration.

But Senator Minchin told Sky News Labor's plan for a government-run fixed broadband monopoly would create a conflict of interest with the regulator, which the previous government had tried to solve by selling Telstra.

The government wants the legislation breaking up Telstra debated in November.

Senator Minchin said a Senate vote should be delayed until February when a $50 million taxpayer-funded implementation study into broadband is released.